Key Takeaways:
Billionaire John Paulson secured a provisional arbitration award of nearly $48 million against former business partner Fahad Ghaffar, who was found to have committed fraud and breached his fiduciary duty.
"Ghaffar engaged in intentional misconduct or fraud by misleading Paulson about an investment in a software company," Arbitrator Carolyn E. Demarest, a retired New York judge, said in her ruling.
The award includes nearly $36 million from a gain Ghaffar made on an investment in a payments-processing company that he diverted from Paulson, plus more than $12 million Paulson invested in Innoveo — a software firm where Ghaffar's brother served as chief executive — based on misrepresentations. Demarest also found Ghaffar pocketed more than $112,000 in American Express reward points tied to business expenses paid by Paulson.
The dispute, which first erupted in 2023, is far from resolved. The case now enters a second arbitration phase, with Ghaffar pursuing his own claims for unpaid fees from his time working with Paulson. Ghaffar's team accused Paulson's side of misleading the arbitrator and violating confidentiality by making the interim award public.
The ruling marks a significant turn in a relationship that began more than a decade ago, when Ghaffar cold-called Paulson's office after reading about the hedge fund manager's purchase of a luxury beachfront resort in Puerto Rico. Paulson brought Ghaffar on to oversee all of his investments on the island, but by 2023 the partnership had soured into dueling lawsuits.
Ghaffar sued first, claiming he was misled into investing $17 million in a Puerto Rican company that owns luxury car dealerships. He later accused Paulson of firing him once the billionaire learned his partner stood to earn some $290 million from their real-estate ventures — a prospect Ghaffar's lawsuit said made Paulson "extremely jealous and hostile." Paulson countersued, accusing Ghaffar of embezzling assets to fund an extravagant lifestyle.
The $48 million award comes at a favorable time for Paulson, who is expecting a second child with his 37-year-old fiancée, Alina de Almeida, and planning a three-day wedding celebration in Monaco next June. The hedge fund titan, famous for his $15 billion bet against the US housing market in 2007 — a trade that earned him nearly $4 billion personally — has been expanding his personal life even as his legal battles play out.
This article is for informational purposes only and does not constitute investment advice.
